Gold

All that glitters is not gold. — William Sahkespeare

This statement was presented as an argument AGAINST gold, “The only reason (gold) has value is … because it always has. — Stacy Herbert

Aristotle defined the qualities money had to possess:

  • It must be durable
  • It must be portable
  • It must be divisible and consistent
  • It must have intrinsic value

Gold was used for early coinage because it met the criteria of Aristotle (as did silver).

Gold is durable. You can bury it in a pot in the ground and be sure of finding it later (or at least someone will if not you).

A currency must be dense, high value for its weight and volume. Easy to transport around. Though tell that to Cypriots trying to get gold out of Cyprus.

You can cut gold coins in half, you can melt them down into gold ingots.

Gold has intrinsic value. There is a limited supply of gold. It has uses in jewellery, in electronics.

Paper money overcomes some of the perceived limitations of gold. It is easier to carry around. It is more easily divisible when you have sub-units as coins. But is has no intrinsic value unless backed by gold. It has less portable value when transported across borders, unless they accept the same paper currency.

With gold coins, it mattered not where it was minted, as it was a gold coin, everyone knew it value.

With paper money, once the link with gold was broken, it lacked any intrinsic value. When whoever owns the printing presses needs more money, they simply print more money. When the banks wnat more money, they create debt.

One of the most stupid things Gordon Brown ever did was sell off gold reserves. He sold so much that it became effectively dumping gold on the world market, the gold price went into free fall, the South African economy was literally bankrupted overnight. And what did the fool use the gold to buy, worthless euros.

Cyprus should not sell off its gold reserves as it is being pressurised to do.

One disadvantage of gold, but true of all currencies, is that is locking up wealth, it becomes dead, in the same way property is dead, it is not being used for productive use.

When the German economy collapsed, which would you have preferred, a few gold ingots or a barrow full of worthless paper.

Paper money, stored as digits on a computer, is not safe, as depositors in Cyprus learnt when the Cypriot government acting as EU puppets stole their money.

Paper money, stored as digits on a computer, is not easily accessible, as account holders of RBS learnt to their cost.

Russia and China are stockpiling gold. Banks are stockpiling gold because like the rest of society, they recognise banks are criminal organisations not to be trusted.

The measure of gold is not dollars or yen or sterling or euros, it is ounces and for Central Banks, tons.

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